19.   INCOME TAXES

The Company’s loss before income taxes was $39.1 million, $43.7 million and $30.2 for the years ended December 31, 2025, 2024, and 2023, respectively, and was generated primarily in the United States. The Company did not record current or deferred income tax expense or benefit during the years ended December 31, 2025, 2024, and 2023.

A reconciliation of the statutory United States federal income tax rate to the Company’s effective tax rate is as follows (in thousands, except percentages):

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* The following states made up the majority (greater than 50%) of the tax effect in this category: California, Florida and Pennsylvania.

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For the years ended December 31, 2025, 2024 and 2023 no amounts were paid for income taxes in any jurisdictions.

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The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows (in thousands):

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In assessing the realizability of the net deferred tax asset, the Company considers all relevant positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The Company believes that it is more likely than not that the Company’s deferred income tax asset associated with its net operating losses will not be realized in the immediate future. As such, there is a full valuation allowance against the net deferred tax assets as of December 31, 2025 and 2024. The valuation allowance increased by $7.7 million and $7.2 million during the years ended December 31, 2025 and 2024, respectively, due primarily to acquired deferred tax assets as well as the generation of net operating losses and disallowed interest expense carryforwards. The changes in the valuation allowance were as follows (in thousands):

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The following table summarizes carryforwards of federal net operating losses and tax credits as of December 31, 2025 (in thousands):

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Under the Tax Reform Act of 1986 (the “Act”), the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not done an analysis to determine whether or not ownership changes, as defined by the Act, have occurred since inception.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s Consolidated Statements of Operations. Due to net operating loss and tax credit carry forwards that remain unutilized, income tax returns for tax years from inception through 2024 remain subject to examination by the taxing jurisdictions.